Key Insights from a16z's 2022 State of Crypto Report 💥

Okay, first things first… I missed you all last week! I was in the thick of helping my team at work execute a conference for 500+ women and non-binary investors in venture capital, so it was a busy week which caused me to miss my first post in 5 months 🤯. At first I felt bad, but the purpose of this newsletter is to document my personal learning journey in a fun and engaging way! So if that means taking a break from time to time because life is life-ing, then that’s okay. :)

This weekend, I’ve been catching up on everything I missed last week. Andreessen Horowitz (a16z), a prominent venture capital firm and huge investor ($4.5 BILLION to be exact) in the the crypto space, recently released their 2022 State of Crypto Report.

After reading this report in the context of the impending recession, 3 key insights stood out to me:

Innovation in Web3 will reach an all-time high.

“As legendary investor Benjamin Graham once allegorized: It’s best to pay no mind to “Mr. Market”, who frequently boomerangs from exuberance and euphoria to despair and depression. To Graham’s wisdom we add an addendum: Better to build. Consider that any prospective founders who swore off tech and the internet in the aftermath of the early-2000s dotcom crash missed the best opportunities of the decade: cloud computing, social networks, online video streaming, smartphones, etc. Now is the time to consider what the equivalent successes will be in web3.”

During the 2008 recession, companies that we all know and love (such as Instagram, Uber, WhatsApp, Pinterest, and Slack) got their start. If history is any indication of the future, we’ll see the next crop of innovators begin to make their marks. Since we’re also at the beginning of the Web3 era, I believe that a decent percentage of new companies founded over the next 2-3 years will be leveraging blockchain technology to solve real world problems. This doesn’t mean that every founder will hit gold, but now is the time for innovation, for taking risks that could transform society. I wonder what the next Google, Microsoft, or Amazon will look like? Who will start it? In what ways will it create a more equitable world? #QTNA — we will see!

There is huge untapped potential for creators in Web3.

“We counted 22,400 web3 creators (based on the number of NFT collections) compared to the nearly 3 billion users posting content on Meta platforms. While in absolute terms, Spotify and YouTube paid out more to creators – $7 billion and $15 billion, respectively – the “per capita” disparity is striking. According to our analysis, web3 paid out $174,000 per creator, while Meta paid out $0.10 per user, Spotify paid out $636 per artist, and YouTube paid out $2.47 per channel. Web3 is tiny but mighty.”

The world of Web3 may be intimidating for artists and creators now, but there will come a time a few years from now when we’ll be shocked at how little we were allowing people to make from their work & how much the big tech giants were taking from creators. Anyone who is able to develop a loyal fan base and add value to their community will be rewarded for the contributions. For example, let’s say I decided to put each of my weekly posts on the blockchain and give people the ability to “own” each of my written pieces. After 5 years of writing these posts, I go from 400+ subscribers to 400,000 subscribers (a girl can dream! lol). As my community of subscribers grows, the “value” of each post will likely increase. Early subscribers (AKA you reading this now) would be rewarded if they buy in early and I become more established in the space. This same mindset can be applied to literally anything that is created by a human and is valued by someone else.

Ethereum is still the dominant blockchain.

“Ethereum’s lead has much to do with its early start, and, the health of its community. As far as developer interest, Ethereum has far and away the most builders, with nearly 4,000 monthly active developers. (See slide 18.) Following that is Solana (with nearly 1,000) and Bitcoin (about 500). Ethereum’s overwhelming mindshare helps explain why its users have been willing to pay more than $15 million in fees per day on average just to use the blockchain – remarkable for such a young project. (See slide 16.)”

At this point, you probably know I’m slightly obsessed with Ethereum. Truly a fave. The validating part is that a16z seems to think so too! However, there are undeniably other blockchains, such as Solana, who are in an earlier stage than Ethereum and have a solid amount of developers. It only further confirms that we’re still SO early, and you never know what project will be the next big thing to pop off.

This week’s recommended action: Watch this 6-min recap video of a16z’s State of Crypto Report!